EXCLUSIVE: With allegations of at least $1 million for a Bruce Lee movie going in the wrong pockets and supposedly shady foreign distribution deals, former QED CEO Bill Block has been slammed with a trademark infringement and unfair competition complaint by his old company. Instead of performing his executive responsibilities exclusively and conscientiously for QED, Block actively and surreptitiously hijacked QED’s assets and siphoned QED’s opportunities for his personal gain,” says the filing (read it here) today in federal court by QED Holdings against the financier and producer. “One of the means he used to do that was to misuse QED’s name and trademarks to establish and operate entities controlled not by QED, but by Block personally.”
The 20-page complaint against seeks various unspecified damages, an injunction and halting use of “the QED name and QED trademarks, including ‘QED International,’ in commerce, including in connection with Block’s company QED Pictures, LLC and in connection with QED-owned films such as Birth Of The Dragon and Dirty Grandpa.” Block has been telling film buyers that the latter Robert De Niro starring pic is his, which QED disputes in today’s suit.
Block officially exited QED in late February. It wasn’t unexpected as the Fury producer and PalmStar Media Capital CEO Kevin Frakes joined with Raj Singh’s Merced Capital L.P. to launch Merced Media in October 2014. The new venture is a development, production and financing vehicle that the trio said will invest $500 million in a three- to five-year program of wide-release films. Claiming Block was supposed to hang around as CEO for at least four years, the complaint also says that on August 4, 2014, he formed QED Pictures, a venture he owned 100% and put together with QED’s CEO and “without authorization from QED.”
“On or about August 5, 2014—one day after forming QED Pictures— Block, on behalf of QED Pictures, executed an agreement between QED Pictures and Chinese investors pursuant to which those investors agreed to provide $10 million in financing for Birth Of The Dragon ($5 million in equity and $5 million as a minimum guarantee for distribution rights in China),” the lawsuit claims about a deal for the Bruce Lee biopic that Block pulled off. “The investors agreed to make a $1 million down payment shortly after executing the agreement.” That $1 million went straight to Block himself on QED’s name, alleges the complaint, which also says QED put around $150,000 into the development of the pic
The lawsuit against Block, QED Pictures and QED International, LLC certainly makes the producer’s separation from QED look a lot messier – especially with the claims it makes, though some are much less focused than others. What is established is that in May 2012 Block and his partners sold “virtually all of the assets” of their decade -old QED International production and distribution company to Media Content Capital for $25 million. Besides the cash out of the deal announced at Cannes that year, the sellers got a 25% equity in the newly created QED Holdings, with the remaining 75% being held by MCC. “Among other things, QED Holdings, LLC, the Plaintiff here, received all rights, title and interest to all of QED International’s motion pictures, including those produced, in progress, or in development.”
That’s where things seemed to go wrong, at least according to the plaintiffs.
“QED has now discovered that, while Block was serving as QED’s CEO, he was actively and surreptitiously working to steal QED’s assets and leverage QED’s opportunities for his own personal profit,” says the filing against the vet financier. “QED’s inquiries into the nature of Block’s activities during the time he served as QED’s CEO are ongoing, and ascertaining the full extent of Block’s malfeasance is difficult for many reasons, including because Block controlled the Company and was able to disguise his wrong doing and because Block has withheld from QED certain information he and others working with him used and generated while he served as CEO. But, at least some of Block’s misdeeds have come to light.” On the perks side, the lawsuit claims that Block was paid $650,000 a year by QED Holdings with other options and benefits.
“Notwithstanding the recent change in management, we will continue to support promising new creative endeavors and to stand by our existing commitments in order to ensure that projects in the pipeline have the creative and financial support to come to fruition,” said QED Holding CEOs Sasha Shapiro and Anton Lessine in a statement to Deadline after the lawsuit was filed today. “Toward that end, we will fight for the viability and all legal rights of this company, whether protecting our brand identity or content ownership. We are excited by the opportunities ahead and remain focused on the future of QED.” Lessine’s father is a former Minister in the government of Russian President Vladimir Putin and issues of the source of Mikhail Lessine’s financial activities and potentially the company’s money have been raised in Congress here.
Steven Marenberg, Josh Gordon and Josh Geller of L.A. firm Irell & Manella LLP are representing the plaintiff in this no April Fool’s action.